The agreement with the state applies to nearly 11,000 people who worked at Abercrombie & Fitch, Hollister Co. and Abercrombie stores in the state from Jan. 1, 1999, through Feb. 15, 2002. The settlement details were first reported Tuesday by the San Francisco Chronicle.
The state alleged that the company's "Appearance/Look Policy" was enforced in a way that required store employees to buy the company's clothes.
"These are workers who, by and large, may have been making more than minimum wage, but not a lot more," said Miles Locker, a California Labor Commission attorney.
Abercrombie confirms it has encouraged its employees to purchase the company's clothes, but denies that wearing the goods is a requirement. The company revised its policy last February and denies any wrongdoing.
"Both before and after implementing its revised policy, Abercrombie has offered discounts to its associates to encourage, but not require, them to purchase and wear Abercrombie clothes. However, those decisions are made voluntarily,'' Abercrombie spokesman Tom Lennox said in a statement issued Tuesday.
Under the terms of the settlement, Abercrombie agreed not to force workers to buy its clothes and will reimburse former employees for Abercrombie-brand clothes purchased for working in California stores during that period. Those reimbursements range from about $200 to $490, varying with each former employee's job status and tenure.
The settlement with the state is separate from a similar pending civil suit over Abercrombie's dress-code policies.
The New Albany, Ohio-based clothing chain was also sued last week for employment discrimination. That suit alleges that Abercrombie discriminates against blacks, Hispanics and Asians with a corporate policy that requires all sales people to exhibit an all-white "A & F look" and by cultivating an overwhelmingly white sales force.